The West Ham youngster, who is comfortable in defensive midfield and at the back, is in the middle of a tug of war between England and Ireland over his international future.
Rice has appeared three times for the Republic, but has not been called up to the most recent squads and is considering switching allegiances to the country of his birth.
Walters, who has twice played alongside him for the men in green, told 'Goals on Sunday' on 'Sky Sports' that Rice is an:
"Exceptional player. I think he is brilliant and he is 19. For him at the moment, only he knows.
"There has been much made about agents and things like that but only he knows and it is a difficult decision.
"You see now players are nowhere near the first team at 19 years old but he is playing in the Premier League week in and week out.
"James Collins came down to Ipswich for a few days to train and he said he was [West Ham's] best player last season.
"The rest will come for him. He is 19 and I think it is a difficult position he has been put in. Let him concentrate on playing for West Ham and the rest will come in.
"He is in an interesting position because he is out of contract at the end of the year at West Ham as well. If I was West Ham I would be doing anything I could to keep him at that club because he is an exceptional talent."